Unravelling the Connection Between New Infrastructure in Morocco and Renault Stock Price
April 10, 2014 • Betty Chemier
- Web intelligence suggests relationships between international media attention on Moroccan infrastructure and the performance of companies investing in the country.
- More specifically, there are recurring correlations between the media’s attention towards the Tanger-Med port facility and fluctuations in Renault’s stock price.
Is there a relationship between the economic performance of a country and the financial health of the companies that have chosen to invest in it? Let’s use Recorded Future to find out.
For a little context, Morocco is the top recipient of foreign direct investment (FDI) in North Africa, with France being the leading investor. Morocco has become a coveted investment destination in North Africa mainly due to its political stability and steady economic growth. The Moroccan government started to develop the Tanger-Med port area in the early 2000s, designating it as the centerpiece for future FDI in the country. Located less than 10 miles from Europe, it is already one of the busiest ports in Africa. Authorities expect it to have an 8 million container capacity by 2017.
The visualization below from Recorded Future shows the connections between the Tanger-Med port and different multinational companies. The event highlighted, from September 5, 2013, shows Renault celebrating its symbolic milestone of 100,000 cars exported to Europe from its factory in Mellousa, Morocco.
By reading the articles pooled by Recorded Future’s web intelligence software, we learn the Tangier Exportation Free Zone is working in tandem with the port. This is a protected free trade environment where companies from around the world can operate tax-free. One article mentions Renault has recently invested $1.2 billion in the zone, and that Renault’s plant is located very close to the Tanger-Med port, allowing for easy and efficient shipment of goods. The article also mentions the French carmaker plans to leverage the location of this port as it can use it to easily ship to Europe, Turkey, Africa and South America.
The next visualization from Recorded Future shows a peak in media attention toward both Renault and the Port during the month of September 2013. The increased number of references this month is explained by a high number of news outlets celebrating the new port.
By following the media leads, we also learn the Renault plant is of great importance to Morocco’s interests. In particular, Renault is fundamental to the role the Tanger-Med port is designed to play in their economy moving forward. The presence of such a well-known European brand has helped boost the image of the Tanger-Med port area as a legitimate destination for foreign investment.
Renault was one of the first companies to enter the space, and has been very successful since establishing its operations. In 2013, Renault experienced an 81% increase in number of vehicles transported through the Tanger-Med port. The success of Renault in Morocco has served to attract even more FDI to the country. As such, it is essential for Morocco to support the continued growth of Renault’s operations.
The win-win nature of this relationship has meant over the past three years the French automobile giant has moved much of its operations out of Europe and into Morocco. According to the Committee of French Automobile Manufacturers, Renault produced 485 vehicles per day at its Tangier factory in 2013 alone. That is roughly twice the number of cars built there in 2012. The French news corporation Actu-Eco claims Renault will continue to increase production at the factory in hopes of eventually producing 400,000 vehicles a year there.
Not incidentally, the Renault stock price has performed remarkably in the past two years, far outpacing the CAC 40. The French benchmark has grown 20%, while the carmaker’s stock (RNO.PA) has grown 60%.
Now, let’s try to better visualize the relationship between the Moroccan port facility and the French carmaker by organizing Recorded Future data over time. The line chart below measures the rising and falling levels of positive and negative news concerning the topic of Tanger-Med over the past one year. High values correspond to positive sentiment while low values correspond to negative sentiment. The line on the bottom tracks Renault’s stock price over the past one year. By combining the two, we may see how news for Tanger-Med correlates with Renault stock’s performance. On several occasions, a correlation was found between the rise in positive media publications about the port, and fluctuations in the price of the company’s stock.
The green dot corresponds to September 9, 2013, a date in which good news regarding Tanger-Med was piling up. Through Recorded Future, we learned Maersk’s 18,000 TEU Triple E ship called at the port that day, putting the spotlight on the new port’s facilities. Business news articles were applauding the port’s productivity level of 29 moves per hour and the terminal’s 800 meters of deep water quay. Incidentally, this corresponded to a positive period for Renault stock.
The red dot corresponds to October 24, 2013, date in which more critical news regarding Tanger-Med was making the headlines. For example, an article published by Oxford Business Group highlighted the poor connectivity within Morocco’s fragmented domestic transport system and mentioned how that could limit the potential gains of the port. This corresponded to a negative period for Renault stock.
Using open source information, we’re able to find recurring correlations between the media’s attention towards the Tanger-Med port facility and fluctuations in Renault’s stock price. This is an example of how web intelligence can be useful to understand the nexus between national infrastructure policies in emerging economies and the performance of multinational corporations.